2. Meet with key personnel and your board of directors or advisors:
+ Form an Advisory Board that will help guide and support you through the process
+ Get your key employees together to have a candid discussion on how to fix the company, ask for their cooperation and seek advice based on their expertise.
+ Always share the reason for changes with employees

3. Always be prepared
+ Don’t go into any meeting without a plan of your own;
+ People lose confidence in leaders who lack a plan and vision for their business;
+ The key in this type of meeting is to be self-assured, open-minded and flexible; and
+ Share your plan with investors, management and key employees

4. Meet with your key customers
Many time customers get their information – or misinformation from rumors. Key customers are becoming nervous and some are even looking for alternative suppliers. Inform your customers about your situation and tell them how you plan to correct it; be reassuring, but not deceitful.

5. Meet with your suppliers
Your company’s suppliers get very nervous when they hear rumors that one of their customers is having trouble. Develop a payment plan for each vendor, outlining the problems and how you plan to deal with them. Also, consider looking for new suppliers, which may allow you some breathing room to pay your old suppliers slower. Work-out a detailed plan with your most valued vendors.

6. Contact tax authorities
If you can’t pay your taxes, notify the authorities and work out a payment plan with them.NEVER EVER stop paying your employees’ tax withholdings – that’s considered THEFT – it’s their tax money that you deposit in their account with the state and federal tax authorities. It is a criminal offense not to pay sales tax you have collected on behalf of the government.

7. Contact your bankers
Have a face-to-face meeting with your banker. Give them the bad news AND your action plan. Appear confident and reassuring and be specific with your request for assistance.

To assess what stage your company is at, list all the challenges you face and suggested solutions. Then, map the workflow & workload in each department, prioritize the steps you are to take, while re-evaluating the cost/benefit of each step. Have a detailed written business plan – including sales & marketing, operations, and financial information. Just preparing a spreadsheet with a budget is not enough, as you need to evaluate all internal areas of your business, and look outside to find out what your competitors are doing, and evaluate your product/service offerings and the value you offer to your competitors. This is extremely important as the example below will show:

One of my clients had a business of selling music and video CDs through big box stores, supermarkets and other retail outlets. His business was profitable for almost 15 years, but he did not see the signs that he business was going to be eliminated by iTunes and other music download services, and by the new way that people watch movies, be it via their cable company, Netflix, the internet, or other such services. When I was introduced to this business after it sustained a few years of losses, all that was left to do was to close it down while trying to minimize the losses of the owner, who had personal guarantees to his lender. We did that by strategically selling the remaining inventory to other companies, that in my opinion may find themselves in the same situation sooner rather than later.

Summary:

One of the most important keys to success is to first recognize that there is a problem, and then decisively deal with the issues at hand. If your skills are not suitable for this task, then call in an expert who can help you lead the turnaround, or help sell your company at the best price possible given its distressed situation.

About the Author

Yoav Cohen is the Managing Partner of NYC Advisors, LLC and has 25 years experience providing financial and operating leadership to companies ranging from startups to Fortune 500 companies. He is an expert in mergers & acquisitions, complex negotiations, strategic planning, international finance, restructuring, business development and team building.